Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As the Deputy is aware, I introduced the home renovation incentive, HRI, in budget 2014. This scheme came into operation on 25 October 2013 and will run until 31 December 2015. The incentive provides tax relief for homeowners by way of a tax credit at 13.5% of qualifying expenditure incurred on repair, renovation or improvement work carried out on a principal private residence.

In the recent budget, I announced the extension of the home renovation incentive to rental properties whose owners are liable to income tax. The aim of the measure is to increase and improve housing supply at a time when there is strong demand for housing and insufficient supply in certain areas. The home renovation incentive has been very successful to date, with works on just over 15,900 homes notified to Revenue's online system as of 9 February 2015. This represents more than €328 million worth of works involving some 4,224 contractors. The incentive is generating significant employment in the tax compliant construction sector and increasing sales in building supplies, hardware and related businesses.

Qualifying expenditure is that which is subject to the 13.5% VAT rate. The work must cost a minimum of €4,405 exclusive of VAT, at which level it would attract a credit of €595. Where the cost of the work exceeds €30,000 exclusive of VAT, a maximum credit of €4,050 will apply. The credit is payable over the two years following the year in which the work is paid for. The tax credit is only available to the homeowner and not to children or other individuals who may fund the works. However, there are other measures available to individuals or family members who may fund works in their parent's homes.

A housing adaptation grant for people with a disability is available from local authorities and provides grant aid to applicants to assist in the carrying out of works that are reasonably necessary for the purposes of rendering a house more suitable for the accommodation needs of a person with a disability. This grant can assist with changes and adaptations to a home, such as making it wheelchair accessible, extending it to create more space, adding a ground floor bathroom or toilet, or installing a stair lift. This grant can cover up to 95% of the cost of works carried out, which is far more generous than the relief available under the home renovation incentive.

If minor works are required, a means-tested mobility aids grant scheme is also available. This scheme provides grants for works designed to address mobility issues in the home, such as the purchase and installation of grab rails, access ramps, stair lifts or level access showers. This grant is primarily targeted at older people. Further details on both of these grants are available from local authorities.

Works which are grant-aided, such as the grants mentioned above, also qualify for the home renovation incentive. Three times the value of the grant is deducted from overall expenditure, with any remainder attracting the tax credit of 13.5%. This is to align with best fiscal practice in that relief is not provided twice for the same expenditure.

It is worth noting that the deduction in respect of grant-aided work is not taken into consideration for the purposes of reaching the minimum spend threshold of €4,405 excluding VAT. Full details of the scheme are available on Revenue's website, along with a comprehensive guide for homeowners which answers frequently asked questions and provides assistance to homeowners who may wish to avail of the incentive.

The Deputy may be interested to note that there is a provision for the refund of VAT incurred on qualifying goods for the exclusive use of disabled persons in the Value Added Tax (Refund of Tax) (No 15) Order 1981. The order specifies the degree of disability and defines the qualifying goods as goods which are aids or appliances, including parts and accessories, specially constructed or adapted for use by a disabled person. The order extends to works carried out on homes to adapt them to make them more accessible for disabled persons. The works can be paid for by family members. As the rate of relief provided under the HRI equates to the same amount of relief under this VAT refund, it is not necessary to include such works in the HRI.

If the Deputy has a specific person, or number of persons, in mind, the Value Added Tax (Refund of Tax) (No 15) Order 1981 can be accessed by a relative and provides the same relief at 13.5% for the work undertaken.

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